Connect with us

Business

Shell halts supply of gas to NLNG

Published

on

Shell threatens NLNG, floats rival gas firm

The Shell Petroleum Development Company (SPDC) has once again declared force majeure (FM) on gas supplies to the Nigeria Liquefied Natural Gas (LNG) export facility on Bonny Island.

The practice, which is often used in the oil and gas sector, allows contractual agreement to be breached without any cost on the belief that the circumstance leading it is beyond both parties.

This is the second such action in less than six months by a major oil exploring company in Nigeria.

Though it attributed this to leaking gas pipes, facts suggest other reasons, including the continuous destruction of oil facilities in the Niger Delta region of the country by militants.

A spokesman of the oil firm, said: “The Shell Petroleum Development Company of Nigeria Ltd (SPDC) declared force majeure on gas supply to NLNG on 8 August 2016, following a leak on the Eastern Gas Gathering System (EGGS-1) pipeline through which it supplies the bulk of its gas to NLNG.”

Read also: Why CBN authorised banks to write off 25% of $1.9bn bad-debts

But investigations revealed that the latest blowing of the Escravos oil facilities in Delta state early last week must have been the main reason for the latest action.

In the past six months, in which the Niger Delta Avengers (NDA) had stepped up their activities, other major oil firms, including Chevron, had been forced to stop exploration and export of crude oil.

The situation has seen Nigeria losing about 500,000 barrels per day and has been largely responsible for the country’s inability to meet its budget projection, anchored on 2 million bpd and anticipatory expenditure of N6.7 trillion this year.

There are bound to be far reaching implications of the latest stoppage of gas supply by Shell to the economy, said economists.

For instance, the SPDC, Royal Dutch Shell as a joint venture with the Nigerian National Petroleum Corporation (NNPC), supplies gas to the LNG plant, the only means of Nigerian gas export train to the international market.

With the declaration, the reliance of LNG to make up what Nigeria is currently losing from poor price of crude oil may have to be reviewed.

Also to be seriously effected is the promised improved power supply based on the hope that blown up pipe lines, supplying the product to power plants across the country, would have been fixed.

Cooking gas consumers may also feel the impact of the development, as they may have to grapple with a situation that will see price of the product rise after the last 35 per cent increase.

By Emma Eke …

RipplesNigeria …without borders, without fears

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now